The EU is accusing Amazon of misusing the data it collects from third-party sellers on its platform, European commissioner Margrethe Vestager announced today. The European Commission says Amazon is “systematically” using non-public marketplace seller data to unfairly compete with sellers in France and Germany. The accusations are the result of an investigation that was announced last year which looked at how Amazon uses sales data to compete with the platform’s independent merchants.
Here’s what the Commission is objecting to specifically:
The Commission’s preliminary view, outlined in its Statement of Objections, is that the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany - the biggest markets for Amazon in the EU.
The Commission believes that “very large quantities of non-public seller data” are used to help Amazon’s retail business “to the detriment of the other marketplace sellers.” Amazon will have the opportunity to respond to these claims in the coming weeks, Vestager said.
We reached the preliminary conclusion that @amazon illegally has abused its dominant position as a marketplace service provider in DE & FR. @amazon may have used sensitive data big scale to compete against smaller retailers. Now for @amazon to respond. @EU_Competition— Margrethe Vestager (@vestager) November 10, 2020
In a statement, Amazon said it disagreed with the Commission’s allegations, adding that it will “continue to make every effort to ensure it has an accurate understanding of the facts.”
“No company cares more about small businesses or has done more to support them over the past two decades than Amazon,” the company said. “There are more than 150,000 European businesses selling through our stores that generate tens of billions of Euros in revenues annually and have created hundreds of thousands of jobs.”
The Commission also announced today that it is opening a second antitrust investigation into the company to look at whether it gives preferential treatment to its own retail offers and marketplace sellers that use its logistics and delivery services. In particular, this investigation will look at how Amazon decides which merchant to link to using its “Buy Box.”
“Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” Margrethe Vestager said it a statement. “The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services.”
Amazon’s Marketplace platform, which now accounts for over half of its physical merchandise sales, has been attracting scrutiny for years. Most notably, earlier this year federal lawmakers grilled Amazon CEO Jeff Bezos over its treatment of third-party sellers. The hearing followed a report from The Wall Street Journal which claimed Amazon uses data from independent sellers on its platform to develop and launch competing products.
In response to the WSJ’s investigation, Amazon said that while it uses “sales and store data to provide our customers with the best possible experience” it prohibits its employees from using “nonpublic, seller-specific data to determine which private label products to launch.” However, at the USA’s antitrust hearing in July Bezos said that he couldn’t guarantee that this policy has never been violated.
In August there were early signs that the US investigation was entering a new phase after reports emerged that the New York and California attorneys general, as well as the Federal Trade Commission, were planning to investigate Amazon’s platform.
Individual European countries have also conducted their own investigations. Last year, on the same day the EU announced its investigation, Amazon agreed to change its terms of service for third-party merchants in response to an investigation by German regulators. In particular, the company agreed to give sellers 30 days notice and a reason before removing them from its platform.
The EU’s press release that there is no legal deadline for when its antitrust investigation will reach its conclusion. However, if found guilty, The Wall Street Journal notes that Amazon could be fined as much as 10 percent of its annual global revenue. This translates to around $28 billion when looking at its earnings in 2019.
Update November 10th, 8:24AM ET: Updated with statement from Amazon.